Stocks Up For Week, Approach Key Resistance

Stocks closed higher for the second week in a row, but still remain slightly below the prior bull market peak from mid-February.

This is the key resistance area we want to watch over the intermediate-term.

If the bulls manage to clear this level, there is a good chance we see even higher stock prices.

However, as I said in the last update, investors should still be patient here. The bullish intermediate-term uptrend may still be consolidating after a substantial multi-month rally, and it would probably be best to wait for the market to confirm new highs, or notch a major follow through day. (Image: kjdyck on Flickr)

Last week, the bulls were in complete control of overall price action, as we closed the week near the high end of the trading range. Over the short-term, keep an eye on critical psychological support near 1295-1300 (S&P 500), this is a key area to watch. A downside breakout through this level would be a clear intermediate-term warning sign for the bulls.

Also, last week's high near 1338 is a short-term resistance level to keep an eye on, as well as support near Tuesday's low (1305).

 

 

As I mentioned earlier, we are still trading within a short-term range, and I have highlighted this potential consolidation area on the following S&P 500 daily chart. A breakout from this range (red line resistance) would confirm a new bull market high, and further upside from that point would be likely.

Also on a positive note, it appears as though we have decisively moved back above key moving average support lines. So as the market moves higher, we will continue to keep an eye on the 20-day MA (1310), and 50-day MA (1300).

 

 

"This is a long-term update, and we focus on the big picture. Is there any reason to think that this multi-year bull market is over? At this point, unlikely. Until we see the confirmation of a major intermediate-term lower low, or lower high, the long-term bull market remains in play. What are some of the key support levels that we would need to see taken out here? Well on the NASDAQ, this means a clear break below 2500, and on the S&P 500, we would need to see 1230 taken out".

It still appears as though the NASDAQ may be setting up for a key retest of the 2007 bull market high. On October 31st, 2007, the benchmark index hit 2861, a level that would ultimately serve as the peak of a five year bull market. A clean breakout through this highlighted resistance level would be an important psychological milestone for this bull market.

Last week, the NASDAQ added 1.7%, and the S&P 500 gained 1.4%. Volume ticked higher for the week on the NASDAQ, but declined on the S&P 500. Overall volume registered below average on both indices.

As I have said before, I remain cautiously optimistic on the general market until we see the decisive confirmation of a new bull market high, or a follow through day.

Key intermediate-term levels to watch on the NASDAQ include resistance at the 2007 bull market high (2860), support near 2500, and the 10-week moving average line near 2736.

On the S&P 500, keep an eye on resistance near 1350, and the 10-week moving average support line near 1305.

 

 

The S&P 500 was virtually unchanged for the month of March as we formed a Dragonfly Doji candle, and prices slid just .1%.

The benchmark index closed well off the low end of the monthly trading range (75 points), so it was clearly a volatile month. For now, the long-term price trend is decisively higher, as we continue to trade well above the rising 12-month moving average support line.

 

 

Our Dow Theory outlook has been updated with new potential intermediate-term support levels. These areas have been circled in blue.

The Dow Jones Industrial Average and the Dow Transports simultaneously confirmed new bull market highs recently, and key intermediate-term support levels have been updated accordingly. There are no other changes to our Dow Theory outlook, and we remain on a long-term buy signal.

 

 

The Dollar Index slipped .5% last week, after rising .65% two weeks ago.

The next major support area to watch has been highlighted.

At this point, the long-term trend is still bearish, as we remain on a 10/40 week MA sell signal.

 

 

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